On this episode of the podcast Ceil DiGuglielmo and Susan Woodcock talk about pricing perceptions. How your own thoughts and feelings keep you from pricing objectively.
You can listen to this episode of the podcast here:
Have you ever set a price lower than what you know is fair and profitable because...?
1) it's small and doesn't look like much (like tiebacks, napkins, placemats, sheer rod pocket T&B curtains, etc.)
2) it's "bedding" (why are dust ruffles priced less than valances?)
3) it's what the customer paid for the same item before
4) you need the work
5) the customer is on a budget
6) the fabric wasn't very expensive
7) you fear the customer will complain
8) it's what another workroom charges
9) you work from home (it's homemade)
10) you think the customer will think it’s too expensive
Yes - Ceil and Susan admit to being guilty of perception pricing!
The pricing perceptions listed above are based on emotion, instinctive feelings, past experiences, bias and generalizations. Not only does this keep you from being profitable but it requires emotional energy that takes away from your ability to focus on your business.
When you don’t feel like you can charge enough to make a profit and base prices on perceptions you will end up feeling insecure, ashamed, and undervalued. You can’t blame the customer but you might feel resentful towards them anyway.
How to Prevent the Pitfalls of Perception Pricing
Focus on objective data and analysis such as costs, time studies, overhead and profit.
Understand perceived value and who your ideal customer should be.
Set pricing goals and track your success.
Build confidence with education.
Discussion Questions:
1) How does perception pricing affect your relationship with customers?
2) Do you fear charging too much? Why?
3) What other pitfalls are keeping you from building a successful business and are they related to emotional decisions and biases?
Resources:
The Six C’s of Pricing Custom Work with Jeanelle Tech, Library Circle Time webinar, June 2018 www.csfrl.org
30 Minutes with Workroom Tech, Episode 33 "Pricing and Your Hourly Rate"
Price Your Work with Confidence by Kitty Stein
Michele Williams, Scarlet Thread Consulting